The Long-Term Foreign-Currency Issuer Default Rating, or IDR, of Saudi Arabia has had Fitch Ratings change the forecast from Stable to Positive and confirm the rating of A.
The Kingdom’s improved sovereign balance sheet, brought on by increased hydrocarbon revenues and its dedication to fiscal consolidation, is reflected in the outlook revision.
The credit rating service predicted that until 2025, the government debt to GDP ratio would be below 30%.
Additionally, the Saudi government is anticipated to maintain sizeable budgetary reserves, including deposits at the central bank exceeding 10% of GDP.
For the first time since 2013, Fitch anticipated that Saudi Arabia would post budget deficits in 2022–2023 totaling 6.7 and 3.5 percent of GDP, respectively.
Brent crude oil prices are anticipated to be $100/bbl and $80/bbl on average in 2022 and 2023, respectively, while Saudi Arabia’s oil output will be average 10.7 million bpd and 11.1 million bpd.
According to Fitch, this would be the Kingdom’s highest continuous amounts of oil production.
It was mentioned that the 12.2 million bpd capacity of Saudi Arabia’s largest energy company, Aramco, will be increased to 12.6 million bpd in 2025 and to 13.3 million bpd by 2027.
Including the fact that the agency’s projected budget deficit would shift by 2.3 percent of GDP for every $10/bbl change in oil prices.
Similar to the previous example, a change in output of one million bpd would alter the fiscal deficit estimate by 2.3 percent of GDP.